The Reserve Bank of Zimbabwe (RBZ) has cut its policy rate from 30 percent to 27.5 percent with immediate effect.
In a press statement yesterday, RBZ Governor Dr John Mushayavanhu said the Monetary Policy Committee (MPC), which met on September 28, had noted continued stability in prices, the ZiG and the exchange rate, which had helped anchor inflation and exchange rate expectations.
“The MPC applauded the continued stability of prices, the domestic currency and the exchange rate, which has helped to firmly anchor inflation and exchange rate expectations,” Dr Mushayavanhu said.
He said annual ZiG inflation fell to 2.9 percent in August, its lowest level since 1980, before increasing moderately to 3.7 percent in September, largely due to rising international oil prices amid escalating conflict in the Middle East.
“Inflation expectations have, however, remained well anchored with month-on-month inflation averaging 0.4 percent for the period from January to September 2026. This translates into an annual average inflation of 4 percent,” he said.
Dr Mushayavanhu said prudent money supply management had supported price stability, with reserve money remaining within targets agreed between the RBZ and the International Monetary Fund (IMF) under the 10-month Staff-Monitored Programme (SMP).
“Accordingly, annual inflation is expected to remain in single digit levels, at below 7 percent by the end of 2026,” he said.
The Governor said the central bank still expected the economy to achieve its initial 5 percent growth target this year, supported by strong performance in mining and agriculture.
“Reflecting robust economic activity, foreign currency inflows increased by 37.8 percent to US$14.3 billion in the period to August 2026, from US$10.3 billion during the corresponding period in 2025,” Dr Mushayavanhu said.
The MPC also reduced the interest rate on the Targeted Finance Facility from 15 percent to 12.5 percent, while capping banks’ all-inclusive lending rate to productive sectors at 22.5 percent.
However, statutory reserve requirements will remain unchanged at 30 percent for demand deposits and 15 percent for savings and time deposits.
Dr Mushayavanhu said the policy rate reduction was part of gradual monetary policy normalisation.
“The reduction in the Bank policy rate does not signal monetary easing, but a realignment of the policy rate to the observed inflation dynamics,” he noted.
Meanwhile, the MPC said it will continue monitoring risks arising from geopolitical tensions and forecast El Niño conditions during the 2026/27 agricultural season while balancing inflation and growth.
